Faculty Compensation

January 15, 2015

As Alfred Brophy reports, once again law school applicants are down this year. The number of applicants is down 8.5% at this point from last year’s record-low applicant pool.

This will make the fifth straight year of declines from the last application peak in Fall 2010. In 2010, there were 87,900 applicants, 60,400 were admitted to an ABA-accredited law school (69% of applicants) and 52,500 enrolled (87% of those admitted). In 2013, there were 59,400 applicants, and 45,700 were admitted (77%) and 39,700 enrolled (87%). In 2014, there were 54,500 applicants, a 6.7% drop from the previous year. LSAC hasn’t published the final data on the number admitted, but according to data released by the ABA in December, 37,924 enrolled, a 4.5% decrease in enrollment.

For the last four years, enrollment has dropped each year by about two-thirds of the decline in applicants. If the pattern holds true this year, enrollment will decline by about 5.7%, which would put 2015 enrollment at around 35,750.

Year Decline in Applicants Decline in Enrollment

2011 -10.0% -7.7%

2012 -13.7% -9.2%

2013 -12.3% -6.7%

2014 -6.7% -4.5%

2015 -8.5% Projected -5.7%

For the past four years, virtually every law school in the country has been faced with a choice: lower admissions standards, shrink the entering class size, or some combination of the two. As I have previously noted, 95% of law schools have demonstrably lowered their standards and probably the real number is pretty close to 100%. This can be seen not only by the declining LSAT numbers of entering students, but also in the fact that enrollment has not declined at the same rate as the decline in applications.

As I have made clear in several prior posts, it is my opinion that quite a few law schools have gone too far in lowering admissions standards. In an effort to bring in enough revenue to keep operating or to limit the number of faculty and staff that have to be dismissed, a number of schools have admitted students with a highly questionable level of aptitude for the study of law. Some schools may have attempted to justify these practices to themselves by the belief that they were simply trying to ride out an economic downturn and that law school applications would inevitably rebound. Whether one believes that law school applications will eventually rebound, or that the lower demand for legal education represents the new normal, the recent applicant data shows that we have not yet hit bottom. So, once again, this semester law schools will be faced with the decision of whether to further allow admission standards to erode or to adjust the size of the entering class.

In the abstract, it seems obvious that the right thing to do is to draw a line in the sand and refuse to lower standards even further, especially at the lower-tier schools which are already scraping the bottom of the talent pool. Whatever law school you are associated with, as an employee or as an alumnus, there is no benefit to you, or to the profession as a whole, to have a less capable group of students entering the pipeline to the legal profession each year. But a decline of 8.5% in enrollment would represent a huge decrease in tuition revenue (the primary source of revenue for virtually all law schools) -- at least 8.5%, but probably more, as competition for law students at all levels has meant that law schools have had to discount their tuition more and more each year. Such a significant decrease will most likely mean painful cuts to faculty, staff, and/or programs, unless law schools can determine ways to cut costs in other areas, or increase revenues. Five years into the great law school recession, most law schools have presumably found all the obvious ways to cut costs and explored feasible alternatives for increasing revenues. The low-hanging fruit having been picked, more and more law schools are going to be faced with some very difficult choices.

In this post, I will explore some of those choices and offer some ways that law schools might cut costs so they will not have to lower standards any further. I invite those with other good ideas, either theoretical or based on experience at their schools, to share them in the comments.

November 15, 2013

You can't make this stuff up. Cleveland State Law gave several faculty members $666 raises. Some of these individuals filed an Unfair Labor Practice complaint with the Ohio State Employment Relations Board claiming that they had been given these raises because of of their efforts to organize a faculty union. They could have had a more potent claim, perhaps, if the complaint did not state that this was a veiled threat because "in effect Dean Boise has called AAUP's labor organizers and AAUP Satan."

I'm not sure what's weirder: this claim or the coverage of the formerly respectable Cleveland Plain Dealer, which reported that "the number 666 is universally considered evil and a symbol of the antichrist or the devil."

Of course, we could also debate the merits of the dean's basis for allocating raises. According to the Plain Dealer - I couldn't confirm this independently - the dean based pay raises on "a three part forumla incorporating scholarship and scholarly influence (40 percent), teaching as measured by student evaluations (40 percent), and service through committee work (20 percent)." Really: student evaluations as the sole source of data on teaching quality?

August 02, 2013

Hardly a week
seems to go by without a gloom and doom story about the status of legal
education in America.

Crippling student debt, a poor job market, and graduates (and employers) claiming that new lawyers have inadequate
practical training are among the allegations. It certainly didn’t help that certain institutional members of the
academy were caught cheating in their data reporting on entering student
qualifications and graduate employment data.

Protectors of the realm (of legal
education) have responded in the media and across the blogosphere to argue that
this phase is nothing more than media hype, statistical anomaly, or a few
misinformed and disgruntled graduates with good websites and social media
expertise. However, as I reflect back on my undergraduate economics lessons, it
appears that regardless of the cause, the national drop in law school
applicants during the current 2013-admission cycle represents the market
responding to “new” information and “voting” with their feet and checkbook. Law
schools (including deans and faculty) that hide from, or ignore, this response
choose to do so at great peril.

Over the next month, as a guest blogger
here on The Faculty Lounge, I would
like to share some of my law school’s experiences in facing the changes in
legal education. I also hope that others will share their ideas and experiences
as well.

Perhaps it is best to start the
conversation knowing a little more about why my law school is different than
yours. Understanding our differences will be an important element of
determining whether ideas that have worked at a small, private, non-profit
community law can be effectively scaled to work at larger traditional ABA law
schools. I think that in many cases the answer is “yes” . . . but of course
that is what we will discuss over the course of this month.

Monterey College of Law was founded in
1972 as a community law school accredited by the State Bar of California
Committee of Bar Examiners. Although the state accreditation rules mirror many
of the ABA requirements, there are significant differences that provide greater
flexibility in our faculty selection, curriculum design, admission standards,
and finances.

Each of these issues will be discussed,
but perhaps the best to generate initial conversation with a board directed at
law school faculty . . . is law school faculty.

Here is where my Dean colleagues get
envious . . . for 40+ years, MCL has operated with a 100% adjunct faculty and
no faculty tenure. Our faculty members are practicing lawyers and judges who
teach evening courses in their area of expertise. Despite the fact that faculty
are hired each year on one-year contracts, over one-third have taught at MCL
for more than 20 years. Approximately one-third have served on the faculty between
5-20 years, and the final third have served on the faculty for less than five
years.

I have often said that MCL has the most egalitarian law faculty in the
country, because by faculty decision, every professor, regardless of seniority,
topic, or course delivery method is paid exactly the same rate.

. . . Nothing like jumping right into the hornet’s nest of questioning
whether legal education requires faculty tenure to survive. What I can say is
that for more than 40+ years, MCL has provided a quality legal education that
has produced local judges, DAs, Public Defenders, and private practitioners who
are considered among the most respected in the local legal community. Of course,
a 100% non-tenured, adjunct law faculty would not work in a traditional
university setting. But doesn’t our experience at least raise a serious
question about whether broadly utilizing more adjunct practitioner faculty . .
. and recognizing them as academic equals would provide a more cost-effective .
. . and perhaps a more substantively effective educational environment for our
students?

January 13, 2013

As I have previously observed, if you think there is no oversupply of recent and imminent law graduates, you live in a fantasy world. If you think that every underemployed law graduate in America is just too lazy, too stupid or too greedy to take one of the countless paying jobs just waiting out there to meet the legal needs of the poor (who have no money to pay you, despite their substantial and serious needs), you live in a fantasy world. If you think that there are untold thousands of wonderful, remunerative jobs that don’t require a law degree but that instantly become available to law graduates just because they have one, you live in a fantasy world. We have lots of data measuring the differences between what’s going on here on Earth, and what you think you see from Planet Pangloss.

But there is an equally corrosive rhetoric at the other extreme in this discussion, and it is just as pernicious and misleading. For example, this recent quote from Paul Campos in Fortune: “[I]t's like the subprime mortgage scandal without securitization. When people realize it's a worthless degree, the system is going to collapse.” Lest anyone accuse me of being a hater, let me be clear that I think Prof. Campos has done us all a great service in raising and focusing public discourse on a number of extremely serious and important issues regarding the current state of legal education, and has regularly contributed to the discussion with reasoned and empirically-based arguments about where we are and where we might be headed. My concern is his tendency to lapse into self-loathing (such as in this inaugural post on his blog and much of the rest of what he posted there that month) and hyperbole (such as the remark I just quoted), and the rage and panic it excites in many of his followers.

In a recent post, I called those indulging these rhetorical extremes “Pandemoniasts.” I was thinking of Milton’s Paradise Lost, and the prospect of Hell presented to the fallen angels from the site of the city they will build there, Pandaemonium, which sounds for all the world like this crew’s prospect of all life after law school:

The dismal Situation waste and wild, A Dungeon horrible, on all sides roundAs one great Furnace flamed, yet from those flamesNo light, but rather darkness visibleServed only to discover sights of woe,Regions of sorrow, doleful shades, where peace And rest can never dwell, hope never comesThat comes to all; but torture without end . . . .

(Book I, lines 60-67, spelling modernized)

Before those on the waiting list for anger management start to pile on, let’s all be clear that there is in fact loads of misery in the post-law-school world. There are literally tens of thousands of recent law-school graduates who made six-figure investments in their legal educations, many of them incurring huge nondischargeable loans to do so, who cannot find full-time, long-term employment making any substantial use of what they paid so dearly in time and treasure to acquire. This distress is by no means evenly distributed across the graduates of all law schools, but it is having real and significant effects at almost all of them, including many very well and thoughtfully administered institutions such as the one where I am fortunate to work. This is nothing short of tragic, and of course it has to be addressed to reduce the numbers of future victims of this misfortune. (And we should never forget that prospective reform of the kind currently under discussion in many quarters does little for those already caught in the riptide of the shrinking law-job market. Disaster relief for those already swept out to sea will be the subject of a future post, and is something we should all be thinking about as well.)

That’s why I’ve argued that What Matters Most right now is that there are not enough law jobs for the recent and imminent law grads entering the workforce: Responding to precisely these circumstances, the relevant markets are already bringing powerful forces to bear. What happens when you make more of something (here, entry-level lawyers) than the market wants? Supply contracts and price falls until the market clears. And that’s exactly what’s going on right now. Law-school applications are down precipitously again this year (hat-tip to Dan Filler for the latest numbers) as more prospective law students conclude that the investment of time and money in a JD is not justified. The first-year class that started this past fall is smaller than the previous year’s by at least 10% at roughly half the accredited law schools in the United States. Many schools will shrink, and some will simply fail when they cannot attract enough of what they consider the right kind of applicants. Similarly, price competition among law schools for desirable matriculants is already increasing, right now mostly in the form of price-discounting through offers of financial aid, but with a few institutions freezing and reportedly considering reducing their tuitions.

Judging from the oversupply revealed by the employment numbers gathered and disseminated by the ABA Section on Legal Education, my relatively unscientific guess is that we can expect the number of seats in accredited law schools to shrink somewhere between 20% and 40% from its high in the class entering in the fall of 2010. My equally unscientific guess is that we can expect to see the reduction fairly quickly (on an academic timescale)—perhaps within the next 3-5 years.

This correction, which is obviously substantial, will create more dislocation and hardship. That is deeply regrettable. Students at institutions forced to close will have their studies disrupted, and perhaps terminated (with concomitant loss of their investment) if they cannot find an institution willing to accept them as transfers. The faculty and staff of those failed institutions will lose their jobs, and finding similar jobs elsewhere will be very difficult as many of the schools remaining downsize their own faculty and staff to serve reduced student bodies. (The difficulties I am hearing about from very accomplished and talented applicants for law-teaching jobs this year are just a small harbinger of things to come.) Schools that choose to compete by reducing price, either by selective awards of financial aid that allow them to price-discriminate more effectively, or by reducing nominal tuition rates across the board, will undoubtedly require their faculties to teach more and get paid less.

These hardships will not fall equally on every law school. The really interesting questions are which schools are going to be most quickly and profoundly affected and why. I have some thoughts about that, which I’ll share in a post soon to come. Readers’ predictions in the Comments are solicited. In the meantime, some schools are embracing the inevitable proactively (props to Dean Frank Wu at Hastings, for example, who decided last spring to reduce his census by 20% even though he could still fill 100% of his existing seats, thus seizing the opportunity to manage into and through the change), while others will undoubtedly be dragged down in price or numbers kicking and screaming (and denying and denying some more).

Those in the Schadenfreude brigade who take some joy in these prospects should be ashamed. When markets contract, many people suffer. But is this the end of the world as we know it? Is “the system” going to “collapse”? Don’t be ridiculous.

The legal profession is still an indispensable handmaiden to the American economy. Even with a deeply depressed economy and critical structural changes reducing the staffing and pricing of legal services, there are still countless disputes of all kinds to be resolved, still deals to be done, and more regulations than ever to comply with. There is an interesting debate to be had about whether, in the medium or longer term, the traditional model of conventionally defined legal services provided by guild-licensed professionals will survive (Gillian Hadfield and Richard Susskind, among others, think—with apologies to Prof. Hadfield for oversimplifying her complex and nuanced views—perhaps not). But right now, and for the foreseeable future, there is no responsible argument that every law degree is “worthless” or that “the system” is on the verge of “collapse.” Over 23,000 of the law students who graduated in 2011 had long-term, full-time jobs requiring a law license within nine months, and some modest (and I stress “modest”) complement on top of that found work towards which their law degrees made a real and significant difference. That’s a lot fewer than the 43,000+ who graduated that year, and some of those who succeeded in the job market are making only a marginal living. Those are very significant problems that have resulted in real and serious loss, disruption and pain to many thousands of disappointed graduates. But to suggest that soon no one will be attending law school because there are, or will be, no economically viable entry-level law jobs is absurd.

Bottom line: The legal academy is already shrinking, and that’s going to accelerate for a while—but it will slow and then stop. We have the choice to face the forces driving these changes thoughtfully and proactively, or to be dragged along willy-nilly. What we can’t do is resist them, and those who try will do so at their peril. When it’s done, we will likely be sadder, hopefully wiser, and certainly more modest in our dominion. “Better to reign in Hell than to serve in Heaven”? You tell me.

November 26, 2012

Vermont Law School announced yesterday that it would be offering “buyouts” to staff (and possibly, faculty) in an attempt to weather the sharp drop in law school applicants and LSAT takers
and a $3.3 million budget shortfall.
As a stand-alone institution, VLS perceives itself (and rightfully so)
as more vulnerable to these market shifts than university-affiliated law
schools.

Other media outlets (and blawgs) have devoted ample space to
the “crisis,” so I won’t repeat these arguments here. I will note, though, that the idea of “buyouts” for faculty
is an interesting (and potentially troublesome) one. Universities have been offering tenure buyouts for years –
public institutions, especially, have seen their budgets slashed by state legislatures
desperate over shortfalls not unlike the one facing VLS. Buyouts are not without controversy –
for example, tenure rules frequently limit the types of buyouts that can be
offered (and to whom such buyouts can be extended). Moreover, schools must be careful with their doomsday
predictions when making buyout offers.
Case in point: Whittier
offered buyouts to certain tenured law faculty back in 2007 and found itself on
the receiving end of a lawsuit; faculty claimed that the school’s representations regarding frozen salaries
and 50% increases in courseloads (in the event that the buyouts were not agreed
to) were fraudulent. Whittier had
offered the buyouts on the heels of the ABA putting the school on probation;
after students’ bar exam pass rates improved, the school took steps to raise
faculty salaries and maintain existing faculty workloads.

It remains to be seen whether Vermont is headed toward
faculty buyouts, but if this is a sign of a trend, we should all be paying
close attention (at every level). What is tenure worth? Can it be assigned a dollar value? Is there some idiosyncratic or personal value attached to this form of property (see my earlier post on personality theory)? Is it fungible? Can partner buyouts at underperforming law firms be a model for these initiatives? I look forward to your thoughts on this.

November 14, 2012

For those of you who noticed I hadn’t posted here lately, thanks for noticing. I’ve been listening and thinking, two virtues we all too often honor in the breach. What I’ve mostly been listening to and thinking about is the swelling threnody bemoaning—or in some cases celebrating—the impending Demise of Legal Education As We Know It.

What all this shouting about Fraud, Failure, Exsanguination, Plague and Death has given me is an appetite for some perspective. (My favorite Thanksgiving side dish, inexplicably not served in many American homes these days. Go figure.)

What kind of perspective? Let’s start with some clear thinking about What Matters Most in legal education’s current circumstances. What I mean by this is that we ought to start our discussion about What’s Broke and How To Fix It by isolating, among the many matters of legitimate concern at this time of profound and rapid change, which ones are the most fundamental—the ones that provide the necessary backdrop and context for the rest.

I’m going to start that effort here. I’m working on a longer piece that will explore these issues at greater length and with some effort at empirical support, but as the lamentations swell, I’ve become increasingly concerned that this question is getting drowned out, and at some considerable expense to clear thinking. In my efforts to isolate What Matters Most, I imagine I will exasperate quite a few of you who are understandably preoccupied with issues that I don’t think Matter Most. So let me be clear: The issues that I don’t think Matter Most are still very important, and deserve concerted attention. But those issues are not are the ones that necessarily define the context for plausible definitions of problems and solutions. First things first.

There are roughly three categories of contumely being heaped on the legal academy these days. Two of them have received disproportionate attention, and what’s striking is that they are pretty clearly not the ones that Matter Most. Those two are arrays of related contentions (1) that law school fails to prepare students for practice; and (2) that law school costs too much. Let me say again before readers start calling me names in the Comments that these concerns are, in one formulation or another, both quite important and quite well taken. But they’re not What Matters Most.

What Matters Most is that there are today significantly more seats in accredited American law schools than there are entry-level law jobs for the emerging graduates. This is obviously neither an original nor a novel observation; lots of people in addition to me have written about it. But its fundamental importance has received surprisingly little attention.

To appreciate why it’s important, let’s refine the observation a little. You can argue about how big the overproduction of law graduates is right now. Numerous commentators have focused on ABA employment statistics counting the number of law graduates who have found full-time, long-term jobs requiring a law license within nine months of graduation to argue that something like half of all recent law graduates are “unemployed” or “underemployed.” For reasons I have elaborated on previously in this space, I think this overcounts the number of law graduates unable to make good use of their law degrees in the job market. But however you count it, the overproduction is currently very substantial. I’m still working with the data, but I would estimate overproduction of law graduates today at about 1 in 3—that is, that roughly 1/3 of recent law graduates cannot get a job that makes good use of their law degrees.

You can also argue about how long the overproduction will last—that is, how much of this overproduction is cyclical, caused by depressed demand for legal services resulting from our depressed economy; and how much is structural, resulting from changes in the provision, staffing and pricing of legal services driven by changes in technology and business practices. The difference is critical, because cyclical forces should largely resolve themselves as the economy eventually improves, while structural forces should force long-term reduction in the demand for young lawyers regardless of the pace of economic recovery. I was on record early with the view that the changes we are observing in recent years are much more structural than cyclical in origin, and what has happened since has only confirmed that the sudden reductions in law jobs that have emerged since the economy crashed have resulted predominantly from pent-up structural forces that had been building for years.

If that’s right, What Matters Most is the current and foreseeable future overproduction of law graduates. Period. This matters more than law schools’ pervasive failures to prepare their students adequately for practice—failures that, by the way, have persisted for at least a generation and probably two during which demand for young lawyers grew rapidly and consistently. Why? Because the reason that substantial numbers of recent law graduates cannot get a law-related job is not for lack of practical training. It is for lack of jobs. Schools that improve their practical preparation may help their graduates seize a marginally greater share of the limited law jobs available, but they will not materially expand the job market. While my friends in the Crisis Chorus would probably liken this to improving your chances at Musical Deck-Chairs on the Professional Titanic, I reject this metaphor, but only because I deny the analogy to the Titanic, not the very apt analogy to musical chairs. Again, this is not to say that curricular reform is not very important and long overdue, but it is not What Matters Most.

Similarly, overproduction of law graduates matters more than the excessive cost of a law degree (and the indiscriminate availability of government lending to fuel its increase). Why? Because the reason that substantial numbers of recent law graduates can’t get a law-related job, or a law-related job that pays enough to service their student loan debt or economically justify the cost of their professional degree, is not mainly because they are overburdened with debt. It is because they are undersupplied with jobs. If there were any more law-related jobs available, even at very low pay, the unemployed and underemployed recent law graduates extant today would be swarming to fill them. But they don’t exist. And lowering the price of a law degree will not create more law jobs. In most markets, if you lower price, demand rises. So if you lower the price of a law degree, on the margin you will induce more people to apply to law school (lower cost; lower risk; why not see how I do?), and create an even greater oversupply of law graduates. Is this wise? Yet again, I am not suggesting that there is much good to say about the manner in which legal education is currently priced and funded. Nor am I suggesting that every law school should remain as expensive as it is. But I am suggesting that, if the markets want cheaper law degrees, ordinary price competition (with some interference from regulatory forces such as accreditation and licensure standards that may need attention) should help provide solutions. Watch for it in the next 12-24 months. But with all respect to Jimmy McMillan, I’m not prepared to join The Rent Is Too Damn High Party.

I’ll have more to say about this in coming months, but this post is already long enough. The long and the short of it is that What Matters Most is that there are too many law-school seats and not enough law-grad jobs. In most markets, what happens when there is an oversupply is that production and price fall until the market clears. That’s already happening today. Prospective law students have become aware of the undersupply of law jobs, and law-school applications are falling significantly. Many law schools appreciably reduced the size of their entering classes this fall in response to the falling number of qualified applicants. Price competition on tuition (right now predominantly through the tactical use of financial aid) is being reported. Many schools will shrink, and some will fail. Many will experiment with curricular, placement and financial innovations to meet the demands of the times and attract more and more-qualified applicants. Critically, all of this will be driven by the applicant pool’s perceptions about what kinds of value a law degree will furnish by the time you’re done getting one. And that’s why the oversupply of law-grad production and the undersupply of entry-level jobs are What Matters Most right now. The really interesting questions are which schools are going to be most and most quickly affected by these forces and how.

August 17, 2012

Chapter 10 of Brian Tamanaha's Failing Law Schools explains why law school tuition throughout the rankings has risen to its current levels. After reciting the usual litany of causes -- ABA accreditation standards, faculty size and workload, faculty salaries -- he makes an important point: "[W]e must be careful not to misapprehend effect for cause -- mistaking what law schools have spent their stream of tuition dollars on for the reasons tuition rose." (p. 128) That is, while law schools have chosen to spend their revenue in certain ways, the price of law school is set by market demand and not the accounting cost of those choices. Market demand, in turn, is determined by willingness and ability to pay, and with the aid of student loans, law school applicants have been willing and able to pay rising tuition costs. In short, law schools have raised tuition because they can. (p. 132)

Tamanaha next discusses why law school tuition has risen to the precise level that it has over the last two decades. He pins the cause on elite law schools like Harvard, Yale, and Columbia that, due to their prestige and position as market leaders, charge the top tuition prices. Once the elite law schools set their tuition, all other law schools price in relation to the market leaders depending on their relative prestige and location (i.e., proximity to desirable job markets). Consequently, one can see law school tuition grouped in stepped intervals down the rankings.

The implication of Tamanaha's account is that a law school's tuition revenue is determined by the number of students that it can attract at the tuition it can charge given its market position. (Overall revenue would also include income from endowment and other income sources such as continuing legal education fees.) As noted above, however, the market does not dictate how law schools choose to spend that revenue. And the ABA accreditation standards leave law schools much flexibility in structuring their operations, so meeting those standards still leaves much revenue to allocate at the law school's discretion. Indeed, it would be the purest of coincidences that the cost of an ABA-approved legal education just so happens to equal the amount of revenue that a law school generates in the current market. (That ABA accreditation standards do not drive tuition levels to their current heights is discussed here and here.)

So, law schools generate the revenue that the market allows them, and the revenue is more than needed to operate in a way that meets accreditation standards. What, then, determines the other items on which a law school spends its tuition? Well, to answer that question, we should ask who determines these other expenditures. And the answer to that question is the administrators, faculty, and staff who run the law school. In other words, the personal, professional, and institutional preferences and incentives of those decision makers dictates the choices that shape of the modern law school. So, the following allocations of law school revenue, all of which Tamanaha criticizes in Chapter 4, are all determined by law school administrators, faculty, and staff:

Law school salaries

Faculty teaching loads

Faculty hiring

Faculty travel and research budgets

Faculty research stipends

Note that Tamanaha writes that he reduced or eliminated many of these items in his short stint as interim dean, and so his criticisms are backed up by his actions. (p. 7)

The above leaves me with two take aways. First, the cost of legal education is set by the willingness and ability to pay law school tuition. Consequently, the cost of legal education bears no necessary connection to what it would cost to provide a quality legal education in an efficient manner. Second, those responsible for running law schools have allocated tuition revenue in ways that are open to question. As tuition revenue decreases due to slackened demand for legal education, we will see how these same decision makers re-allocate scarce resources among competing wants and needs. I will look forward to reading the book that tells the story of this next chapter for legal education. But for now, I need to get back to living it.

May 15, 2012

Following up on my recent posts on the Salt Salary survey for tenured professors and for untenured professors at each of four tiers of school, I want to look further at the relationship between the Salt Salary Survey data and the U.S. News law school rankings. First off, let me talk about overall U.S. News rank and salary of tenured professors. There is a -.54 correlation between U.S. News rank and median salary of tenured professors -- that is, as school rank decreases (as it gets better), there is an increase in median salary. The plot at the upper right is of the overall U.S. News rank against the median salary of tenured professors. The more highly ranked schools tend to pay better. Why this is -- and what's cause and effect are really open to question.

Now I want to look at another relationship -- the median salary of tenured professors and the U.S. News peer assessment scores. There is a .47 correlation (n = 66, p < .001) between the median salary of tenured professors and U.S. News peer assessment scores. The outliers on the upper left are Drexel and Touro.

May 14, 2012

Following up on Saturday's post on the SALT (Society of American Law Teachers) Faculty Salary Survey, I want to talk a little more about differences between salaries at tiers of schools (as measured by U.S. News' law school rankings). You may recall that Saturday's post discussed the differences between the median salaries of tenured faculty at four tiers of law schools (1-49, 50-99, 101-145, and not ranked). It showed that there was a statistically significant difference between the median salary at tier 1 schools and the remaning schools. Let's turn to a similar analysis of the salary of assistant professors by tier. (Apparently a number of schools have no assistant professors (they start entry-level untenured faculty at the associate level -- or they haven't done entry-level hiring in some years).)

Salary of Assistant Professors by Tier

Tier N M SD

1 4 113,489 4,912

2 16 102,224 13,927

3 14 100,770 9,313

4 15 92,395 7,919

All 49 99,719 11,785 Median = 99,000

Salary differs by tier: F(3, 45) = 5.05, p < .004

According to the Tukey multiple comparison procedure, only Tier 1 and Tier 4 salaries differ significantly.

May 12, 2012

Now that there's a new SALTSalary Survey out, I want to take a look at the relationship between law faculty salary data and U.S. News ranks. By way of background, SALT (the Society of American Law Teachers) requested information on salaries and on summer research grants from 200 law schools in the United states and Puerto Rico. The survey was conducted by email. Non-responding schools were followed up with another email and if necessary by telephone. Sixty-six schools responded -- a response of 33% . Many thanks, by the way, to Eric Janus, President and Dean of the William Mitchell College of Law, who conducted the survey.

In my recent paper on the relationships between U.S. News law school rankings and racial diversity (and several other variables), I divided the ABA-approved law schools into four groups to obtain a finer set of categories than the current two-tier U.S. News system. I’m using that four-way group again in this post, which deals with some results of the 2011-2012 salary survey published by SALT this month and with the 2013 U.S. News ranks.

Here is the classification of the 195 ABA-approved law schools:

Group. N Ranks Schools

1 50 1 - 49 Yale thru American, Pepperdine (tie)

2 50 51 - 99 Baylor thru Rutgers-Camden, Tulsa

3 46 101 - 145 St. Louis + 4 other schools thru Montana, North Dakota

4 49 Rank Not Published

Total 195

Here are the responses by tier:

Response

Tier Total Yes No % response

1 50 8 41 16.00

2 50 21 29 42.00

3 46 19 27 41.30

4 49 18 33 36.73

The response rate differs across tiers. (Chi-square = 9.41, df = 3, p = .02). Schools in Tier 1 were less likely than other schools to respond to the survey. None of the 28 highest ranked schools in the current U.S. News rankings responded. The highest ranked school that responded is the University of Iowa (rank 29), followed by North Carolina (38), Maryland (39), Ohio State (39), Arizona (43), Colorado (44), and UC-Hastings (44), which – perhaps incidentally – are all public schools.

Peer assessment is an important component of U.S. News ranks, so we would expect the above schools to be included among responding schools ordered by peer assessment (a 5-point scale), and most are. The responding schools with the highest peer scores are North Carolina (3.6), Iowa (3.4), Ohio State (3.3), UC-Hastings (3.3), Arizona (3.2), Florida (3.2), and Colorado (3.1).

Assessment of schools by lawyers and judges (another 5-point scale) is also a component of U.S. News ranks. The 7 responding schools with the highest cores on this dimension are North Carolina (4.0), UC-Hastings (3.9), Iowa (3.8), Arizona (3.7), Ohio State (3.6), Florida (3.6), and Colorado (3.4).

April 20, 2012

According to a new study by the American Association of University Professors, university and college faculty salaries have lagged far behind the substantial growth in university and college tuitions. Thus, adjusted for inflation, faculty salaries at four year doctoral private schools have gone up 7.7%. Tuitions at all private four year universities have gone up 28.9% over the last decade. The disparity at public schools is radically wider. Faculty salaries have gone up 0.7% at public doctoral schools while tuition at all publics has gone up 72% in that ten year period. And all of this has occurred as use of adjunct faculty continues to rise.

There are some unknowns. First, the data has some apple-to-apple comparison problems: the AAUP breaks out different types of universities (doctoral, masters, etc) for salary - but not tuition. We don't know how professional school faculty have fared compared to other professors. And we also don't know if universities are increasingly preferencing research over teaching - leading to lighter teaching loads and expanded faculty size. But some data is better than no data.

If nothing else, this report provides some good talking points.

Update: One other thing I didn't mention, but is worth noting, is that the tuition increases cited here are only hikes in sticker price. We have far less information on increases in real tuition. Many schools have raised their nominal tuition even as they enhanced merit or need based scholarships.

April 13, 2012

At the MSU Law Review Symposium on "Gender and the Legal Profession's Pipeline to Power," Professor Paula Monopoli (Maryland) is talking about masculine norms in the legal academy. She is focusing today on pay equity, a smaller part of her larger project. On pay equity issue, she makes three points:

Female full professors earn 88% of what male full professors earn. Pay-scale information is not transparent. Even in public institutions, it can be hard to get the information (making it physcially available only in hard copy, behind a circulation desk on another campus; when available, the information is not complete). The norm in legal academia is not to talk about money (we're supposed to be in the field for the love of ideas). Women are less likely to negotiate for themselves. Moving up the "ranks" or getting a salary increase often requires doing a visit, but women may be less likely than men to accept visits.

Benchmarks used to measure performance in legal academy disfavor women. Less credit is given to good teaching or service to the institution,(both typically associated with women). There need to be more empirical benchmarks for faculty evaluation.

If scholarship continues to be primary benchmark by which legal academics are measured, we need to change the conditions under which scholarship is produced. Work on gender, family law, inheritance law is devauled by "top" journals. The quantitative expectation for annual scholarly productivity is becoming excessive.

My summary doesn't do justice to Professor Monopoli's larger project, so keep eyes out for her published work.

December 22, 2011

It would be interesting to know if any dean in a private law school or in a public which isn't required to disclose salary has chosen to do so, and what kinds of effects that had, especially if previous administrations had not disclosed.

I would also like to know the answer to that. In fact, this question came up at dinner last night and everyone at the table wanted the answer. No one knew of any school that had disclosed salary information in the absence of a requirement to do so, everyone wondered whether any such examples existed, but everyone bet that there weren’t any (or at least many). And to be clear, I'm interested in whether this information was disclosed to other faculty -- not necessarily to the general public.

So I volunteered to tap our wise Loungers for more information. Can anyone shed any light on Mark’s question? As I mentioned in yesterday’s post, I’ve seen examples of schools that go beyond the technical requirements of transparency, to put that information at everyone’s fingertips. And I did not think the results were positive.

But I’d like to hear from others who might have experiences with or examples of non-mandatory salary disclosure. And if you got a sense of whether the results were positive, negative, or some of both please share that as well.

December 21, 2011

The Texas kerfuffle has raised many questions, some of which have already been discussed at length on other law blogs. But for me, the news brings up a larger question that I’ve been thinking about for a while now: should law school compensation be transparent, at least to other faculty members?

Some schools – for example, many public schools – have very little choice in the matter of whether to reveal salary information, as state statutes require them to reveal that data in some manner. For example, Illinois appears to publish all salaries in the Daily Illini, which I assume is a legislative mandate, rather than a choice on the University’s part (Illini insiders should feel free to correct that impression, if erroneous).

But there appears to be a great deal of variation, even among schools operating under some sort of transparency mandate. For example, I have seen schools that interpret the requirement to make salaries publicly available to mean that they are in a file in the central library, such that one has to make an affirmative effort to discover them. I have seen others distribute salary information in a yearly memo to faculty, such that everyone is confronted with everyone else’s salary, whether you want that information or not. And I have seen some schools following what appears to be the Texas model, under which the reported salary numbers give little useful information about total compensation, because so much compensation comes in the form of benefits that are not required to be reported – children’s tuition, housing, loans, foundation grants and fellowships, etc.

But what I want to address is a different question: assuming flexibility in the matter of whether faculty compensation is transparent to other faculty members, should it be? I’m going to answer that question with a tentative “no” despite the admitted costs of secrecy in compensation information.

As many Loungers already know, there is a reasonably large body of research on salary transparency. Although I’ll draw on that for some of this discussion, I also think that academic institutions – with their limited ability to fire nonperformers and the relative lack of professor mobility, as compared to some other occupations and industries – may not be the best fit for some of that research. Moreover, law schools -- which tend to have less external quality verification, such as grants and peer review – may present different challenges than other academic units. I’ll leave that question to others with more comparative knowledge.

Let me begin with some assumptions about the ideal academic salary system. First, it should be meritocratic, meaning that faculty members are rewarded for excellence in the pursuit of shared institutional goals – for example, scholarship and teaching. Second, it should be fair, in the sense that faculty are neither rewarded nor penalized for traits, behaviors, and the like, unrelated to those goals. For example, the system should show no race or gender bias, “squeaky wheels” should not be able to increase their compensation beyond their due through constant complaints to the dean’s office, nor should more unassuming faculty be passed over for deserved compensation. Third, it should be transparent, in that each faculty member is aware of the total compensation of other faculty members. This transparency enables verification of features one and two – i.e. that the system is meritocratic and fair.

Ideally, a law school’s salary system should embody all three of these characteristics: meritocracy, fairness, and transparency. In my experience, however, real-world law schools rarely embody all three traits. And having worked under both the transparent and non-transparent systems, my vote (for today anyway) is for the imperfect, but better, non-transparent model.

What happens when compensation is not transparent? Well, the fear, supported by some research, is that decision-makers will indulge biases. Some argue that pay secrecy exacerbates pay inequity and the gender wage gap. Others argue that salary secrecy can fuel inequity fears, even when wages are being set fairly.

What happens when compensation is transparent? In a recent NBER working paper, David Card and his co-authors find that pay transparency reduces aggregate employee utility – below-median workers experience lower job satisfaction while those above report no greater satisfaction. Fine, but what does this mean in terms of real life around the law school water cooler? Like most of you, I have seen people obsess nearly to the point of needing medical attention about the one person making $372 more than she is, even if – in the absence of information – this individual would feel perfectly content with her salary. Forget above and below the median – most of us freak out at even the smallest perceived pay inequities. And unlike the widget factory, where there are concrete and objective measures of quality to point to in defense of salary disparities, law schools have only contested and somewhat subjective measures of quality with which to defend disparate salary structures.

Now, I don’t mean to overstate the indeterminacy of academic quality here – usually there are some superstars and some non-performers about which almost everyone can agree. But in between those extremes, salary distinctions have to be defended through a set of contested and subjective criteria about both quality, and the importance of the various aspects of the law school mission. How much does good teaching offset poor scholarship? How do we judge scholarly quality? How much do we rely on objective measures such as citations and downloads?

What is the end result? My experience – which, of course, is not universal – is that extremely transparent systems lend themselves to lock-step compensation based on easily identifiable criteria, such as seniority. Because then the dean always has a clear non-discriminatory metric to point to in defense of pay structure, and the rest of us don’t have to argue about difficult things, such as quality.

And this, to me, is not a good place for a law school to be. The system may be fair (nondiscriminatory), but it is not meritocratic. Nearly everyone feels cheated anyway and the highest performing young folks – i.e. those most likely to be picked off by another school – legitimately so. It just seems to me to be a recipe for a system under which almost everyone is unhappy, there are few incentives for productivity, the highest quality folks have every reason to try to leave, and those who are geographically constrained for family or other reasons (and who, as long-termers might otherwise be institutional building blocks) feel cheated by the institution and thus are less likely to give back.

Now, before someone extols the virtues of lock-step systems (long the norm at many law firms, but increasingly under pressure), I agree that there are some arguments in its favor: the reduction of internal conflict and competition and the fostering of a collective sense of purpose. But law schools are not law firms. The lesser mobility of academics, the reduced ability to fire non-performers, and the lack of the big “carrot” of partnership profits at the end of the day render the two environments too different to map one compensation system onto the other.

These outcomes aren’t inevitable, of course. I’m sure it’s possible to craft a compensation system that is fair, meritocratic, and transparent. But are most law schools inclined to do so?

December 17, 2011

I return to the mysteries of law-firm economics after a hiatus to attend to three speaking engagements and complete the academic term (in other words, as an excuse to interrupt grading my Contracts exams). A belated shout-out to my colleagues Anne Klinefelter and Andrew Chin, and to the editorial board and staff of the North Carolina Law Review, for an exceptionally well conceived and executed Symposium on Social Media (which was one of those speaking engagements)--watch for the Symposium issue of the NC L. Rev. coming this spring for some refreshingly novel and interesting takes on what is elsewhere becoming an overworked topic. (You won't see a paper from me in that issue. My topic at the conference, legal ethics in the social media environment, has already been admirably well explored in print and online by others.)

I want to stress how much these issues of practice economics actually matter to legal educators. Virtually all of our students attend law school with the general aim of practicing law. A great many end up in private law firms, large or small, or (usually a bit later in their careers) in corporate law departments. The demand for lawyers in such positions (that is, for individual and corporate legal services) fundamentally affects our students' prospects for gainful employment.

A bit more specifically, the overall demand for such services affects the overall availability of legal employment, and the distribution of that demand across different categories of work affects the availability of different kinds of legal jobs. Thus when, as now, there is a significant contraction in at least one portion of the private sector--and here I'm referring to the large number of BigLaw layoffs in 2009 and 2010, and the contemporaneous and continuing substantial reduction in the rates of new hiring at larger firms--recent graduates with strong conventional qualifications who previously filled those BigLaw positions are now competing, and vigorously, for positions in smaller firms and government for which there was previously less such competition.

Put somewhat differently, there are fewer law jobs for recent graduates, and appreciably fewer such jobs at the higher end of the pay scale. It's hardly rocket science to suggest that this affects the economic value of a law degree: From behind the proverbial veil of ignorance, a student's chances of securing a job that supports the cost of three years' tuition, living expenses and forgone income and work experience are substantially less today than they were five years ago.

This is by no means the whole story, of course. Some prospective law students have far brighter economic prospects ex ante than others. And economics is certainly not the only reason why people consider law school (though we have empirical data confirming the common-sense apprehension that a substantial number do weigh it as a substantial factor in their decision).

But if the economic value of a law degree is falling overall (and I suggest to you that it is irresponsible to imagine otherwise), in a rational market you can expect fewer people to pay the rising cost to obtain it. It is far too early to say "I told you so," but there have been double-digit decreases in law-school applications across the board this year over last (though we must bear in mind that last year saw record increases in law-school applications and LSAT administrations as college seniors confronted a horrific job market with an effort to settle into a three-year holding pattern).

This is having some obvious effects on the legal academy. The ability of law schools to continue to charge high tuitions--and continue to pay their faculties salaries far higher than those typical in the arts and sciences--depends on making the end product (the law degree) worth it. Since many universities share in their law schools' economic surpluses, the universities care too. Legal employers have been complaining about the utility of the education with which their entry-level employees arrive for well over a generation, but for the first time in memory it would be fair to say that many law schools are listening, and questioning their mission.

One thing I am NOT suggesting is that legal employers know exactly what they need, and how we could be supplying it. I'll try to explore in future posts why things are nowhere near this simple. But that leaves everything up for grabs: What questions should we be asking, and how should we be seeking the answers? This is an obviously difficult inquiry, and I will try to suggest in future posts that it's even harder than it seems. But make no mistake: we are near the front end of a period that I believe will prove to be the most fraught with rapid change that the American legal profession has ever seen.

December 10, 2011

We've always tried to bring you the latest in faculty compensation news here at the Lounge. UT law faculty salaries may be a bit more obscure than most, but thanks to the FOIA handiwork of several inquisitive faculty members, you can find all the University of Texas School of Law salary details here.

The allegations are that the schools misled students by reporting placement rates that were substantially higher than the percent of graduates with full-time jobs that require a JD. According to the complaint against New York :aw School, the school has

consign[ed] the overwhelming majority of [its students] to years of indentured servitude, saddling them with tens of thousands of dollars in crushing, non-dischargeable debt that will take literally decades to pay off.

Complaint, New York Law School, ¶ 3

The "Preliminary Statement" in each complaint that the problem is not limited to the two current defendants:

10. Unfortunately, NYLS’s false and fraudulent representations and omissions are endemic in the law school industry, as nearly every school to a certain degree blatantly manipulates their employment data to make themselves more attractive to prospective students. It is a dirty industry secret that law schools employ a variety of deceptive practices and accounting legerdemain to “pretty up” or “cook” the job numbers, including, among other things, hiring recent unemployed graduates as “research assistants” or providing them with “public interest” stipends so as to classify them as employed, excluding graduates who do not supply employment information from employment surveys, refusing to categorize unemployed graduates who are not “actively” seeking employment as unemployed, and classifying graduates who have only secured temporary, part-time employment as being “fully” employed.

11. Thus, the law school industry today is much like a game of three-card monte, with law schools flipping ace after ace, while a phalanx of non-suspecting players wager mostly borrowed money based on asymmetrical information on a game few of them can win. To a remarkable extent, law schools have been astonishingly successful in carrying out this scheme. Last year law schools awarded over 43,000 JD degrees, an increase of 11 percent from a decade earlier, while law school tuition over the past two decades has risen exponentially, far exceeding both inflation and any increase in attorneys’ starting salaries. Not surprisingly, the debt burden of law school graduates has risen correspondingly, and the average debt burden for graduates of private institutions is now over $100,000.

12. The dramatic increase in law school tuition has dovetailed with the dramatic increase in faculty compensation. Law school professors and deans are perhaps the best remunerated in academia today, enjoying both lavish perks and exorbitant salaries that rival those of Fortune 500 executives. For example, during the fiscal year of 2008-2009, Dean Matasar earned a staggering $543,738 in total compensation, making him one of the highest paid law school deans in the country.

13. After much public hand-wringing and increased scrutiny, the legal profession has finally begun to recognize the systemic fraud the law school industry has been perpetuating. Senator Barbara Boxer of California and Senator Charles Grasserly of Iowa have each sent separate letters to the President of the ABA, taking the organization to task for failing to properly police the law school industry. Additionally, a coalition of 55 law school student body presidents have sent to Congress proposed legislation that would, among other things, create new reporting standards for employment data, require law schools to submit annual employment reports to the Department of Education (“DOE”), and empower the DOE to audit these reports. The problem has grown so acute that even the President of the California Bar Association in a much publicized article in the California Bar Journal openly implored law school deans to adopt more rigorous reporting standards by disclosing the type of detailed employment and salary information that would allow students to get a more realistic picture of their post-graduate financial situation.

14. These entreaties had fallen mostly on deaf ears until now, as the ABA’s committee on accrediting law schools has just recently enacted guidelines that would expressly require law schools to report their true post-graduate employment rate, by disclosing the type of information Plaintiffs are seeking here: the exact percentage of graduates who have obtained permanent, full-time legal employment. Specifically, law schools will be required to break down their employment data so as to indicate whether a position is full-time or part-time, permanent or temporary, funded by the law school or an affiliated university, and whether bar passage or a JD degree is required or preferred.

It should come as no surprise that Kurzon Strauss LLP is advertising for plaintiffs for similar suits against other law schools:

If you are interested in joining the fight against unscrupulous behavior by certain American law schools to lure students with deceptive post-graduate employment statistics and salary information, please let us know here [link deleted]. We are currently investigating additional law schools throughout the country. (Emphasis added.)

July 21, 2011

This past February, Keith Hirokawa at Albany organized the excellent 2011 Northeast Regional Scholarship and Teaching Development Workshop. After dinner on the first night, there was a discussion/panel entitled "Women as Teachers and Scholars." One of the topics of discussion about access to information didn't hit home for me until recently. The heart of the discussion centered around the fact that many women were not sure what the maternity/paternity leave policies were at their school. Additionally, there was a lack of information about what other schools did. (FWIW -- besides the FMLA, we get a course release (3 units) to be taken within a year after the child's birth here at Buffalo).

I was surprised that people didn't know this because we are often well versed in other leave policies. For example, I would be shocked if a room full of junior scholars couldn't tell you their school policies for research leave, junior (or productive scholar) course relief, or sabbaticals. Yet, the lack of information and understanding about family leave policies seems widespread. My general sense from talking to friends (and some are teaching in departments other than law) is that each person's leave is individually negotiated based on the timing of the leave and that person's perceived worth to the institution.

The reasons for this lack of information is probably unsurprising (but perhaps no less disheartening). We tend to be afriad to ask. When we ask about research leaves available to junior faculty during an interview, we send a signal that we are serious scholars looking for time to write. When we ask about maternity leave, we worry that we are sending out the opposite signal. During my interviews, I think I only asked one or two schools about maternity leave -- and only when I felt very comfortable with the person I was talking to or they brought it up. We know that this is a touchy topic legally. Obviously, the prospective employer can't ask you if you are planning to have kids.(but that shouldn't stop them from just generally outlining all leave policies)

The lack of questioning about such policies may also contribute to the ad hoc nature of parental leave. If there is not a large junior faculty or many people questioning such policies, there may not be the motivation to put things in writing. While individuals here and there may benefit from an unwritten policy giving them room to negotiate, I think there is a good reason to have clear parental leave policies. Additonally, making those leaves public will help people at other schools improve their policies. Arguably, this is why many big law firms have such good maternity leave policies -- because everyone knows what the competition is doing.

July 18, 2011

Each year the progressive Society of American Law Teachers (SALT) gives a nod to the Invisible Hand and publishes its salary survey of law faculty compensation in the Equalizer. Markets are more efficient and transparent when participants have reliable price information. SALT's survey does its part to nudge along this market.

The survey is helpful, but this year SALT took a hiatus from the survey to "re-evaluat[e] the methodology of the SALT Survey, exploring ways to improve the accuracy and consistency of the information gathered." I am guessing that one difficulty is low faculty and law school participation. My colleague Beth Lyon is studying the salary survey for SALT. If you have any ideas for improving the survey, please send them to Beth at lyon@law.villanova.edu.

May 09, 2011

Once in a while, I take advantage of having a blog to share information relevant to only a small portion of our readership. This is one of those times. Last week, on May 5, Gladys Lunsford Dimmick passed away. Gladys was the secretary to Fourth Circuit Judge J. Dickson Phillips Jr., for whom several of us in the academy clerked. Gladys was a sweet, fun, and wonderful person with the most brilliant twinkle in her eye. She is already missed.